NJ Supreme Court: Condemnor Has No Duty to Negotiate with Holder of Mortgage

The New Jersey Supreme Court answered in the negative the question whether a condemnor must negotiate in good faith with a mortgage holder that has obtained a foreclosure judgment pre-commencement of a condemnation action. Borough of Merchantville v. Malik & Son, LLC (opinion here).  In so doing, the Court affirmed the plain letter of the statute, and established black-letter law:  “We hold that a condemning authority has an obligation to present an offer to acquire property and to engage in bona fide negotiations with no party other than the individual or entity that holds title to the property or the holder of the interest sought to be condemned.”  The Court later in its opinion noted that a condemnor would have to negotiate with a leaseholder if the fee interest were  not in issue.  A simple and straight-forward rule of law.

The court’s holding was based on its reading of a clear and unambiguous statutory provision (N.J.S.A. 20:3-6).  The court also ruled that the condemnor had no duty to negotiate with the mortgagee as the requirement only extended to those parties for which an offer must be extended.

Compare the Merchantville decision with the Supreme Court’s decision regarding a condemnor’s obligation to negotiate with a tenant, discussed in our 2011 blog post “Tenant Has Clout to Negotiate in Condemnation“.  Are these two opinions consistent with each other?